Suppose Economists at the Department of Finance in Ottawa Employ
Suppose economists at the Department of Finance in Ottawa employ an economic model that predicts the effects of an increase in the GST.After implementation of the change,researchers find that the empirical data is in conflict with the theory.They are likely to
A)modify the prediction in light of the new evidence.
B)ignore the empirical evidence and continue using the model.
C)modify the theory in light of this newly acquired empirical knowledge.
D)reject the empirical data as faulty because it did not support the theory.
E)modify the data to suit the definitions and assumptions.
Suppose economists at the World Bank develop a theory with a prediction that increased levels of foreign aid lead to increases in per capita GDP in the recipient developing countries.They find empirical evidence that is consistent with this theory.The economists are able to conclude that
A)the theory is valid,but should be subjected to continued scrutiny.
B)the theory has been proven correct.
C)the theory is always reliable.
D)the evidence is rejected by the theory.
E)the assumptions used in the theory have been proven correct.
When using statistics in economics,the possibility of error
A)cannot be eliminated.
B)cannot be controlled.
C)cannot be evaluated.
D)is not considered to be important.
E)can be eliminated with more sophisticated statistical techniques.
A hypothesis (or a prediction)is a statement about
A)how assumptions affect theories.
B)those things which we believe to be true,but cannot prove.
C)what will happen in the future.
D)the relationship between facts explained by the hypothesis.
E)how two or more variables are related to each other.